Analysts said the short-term impact on Korea's exports will be limited even after preemptive strikes by the United States and Israel against Iran. They noted that even if international oil prices rise, the decline in export value will not be large, but Korea needs to prepare for oil price volatility given its high dependence on Middle Eastern energy.
The Korea International Trade Association said in a press reference on the 28th that if international oil prices rise 10%, the decline in Korea's export value is estimated to be limited to 0.39%.
According to KITA's analysis, if oil prices rise 10%, export unit prices will increase 2.09%, but export volume will fall 2.48%, resulting in an estimated 0.39% decrease in total export value. KITA said part of the oil price increase is reflected in export prices, but the drop in volume due to slower global demand would be larger.
Imports, by contrast, are expected to increase. If oil prices rise 10%, import unit prices will climb 3.15% and import volume will decline 0.46%, resulting in a 2.68% increase in import value. This reflects Korea's economic structure, which is highly dependent on energy imports.
Corporations' production costs are also expected to rise. If oil prices increase 10%, corporate costs are estimated to go up 0.38%. In particular, manufacturing is projected to rise an average of 0.68%, placing a heavier burden than services (0.16%).
International oil prices have recently faced upward pressure as tensions in the Middle East escalate. After concerns about a military clash between the United States and Iran were raised on the 17th, Brent crude rose from $68.65 per Barrel on the 16th to $71.76 on the 20th.
Still, the short-term rise is assessed to remain limited. KITA noted that with the prolonged Russia-Ukraine war and recurring Middle East conflicts, the shock of geopolitical risks on oil prices has somewhat diminished compared with the past. It added, however, that this situation differs from past Middle East conflicts in that it involves a direct confrontation between the United States and Iran.
KITA pointed out that if a full-scale war breaks out between the United States and Iran or if the Strait of Hormuz is blocked, the possibility of a sharp spike in oil prices still remains. That is because if the Strait of Hormuz—through which 20% of the world's seaborne crude flows—closes, disruptions to crude oil and natural gas supplies would be unavoidable.
Korea's export share to Israel is 0.3% and to Iran is 0.02%, a factor limiting short-term shocks. However, KITA said risk management for energy price volatility is necessary because Korea sources 70.7% of its crude oil and 20.4% of its liquefied natural gas (LNG) from the Middle East.
KITA said, "In the short term, the impact on exports is limited," but added, "In the midterm, the resilience of the global economy and trade demand will have a greater effect on the recovery of export volumes and unit prices."